Americans continue to pay down revolving debt balances after all, as pessimism may be curbing consumer credit growth
It turns out that Americans are still paying down their credit card balances after all. Last month, the Federal Reserve reported that revolving debt grew by about 3%, which marked the first non-holiday shopping driven increase in card card balances since August 2008. But a report the central bank released today revised that uptick to virtually flat growth -- and it was entirely erased by a subsequent decline in credit card balances in April.
Here's the historical chart for total credit, revolving credit, and nonrevolving credit:
Besides March, revolving credit levels were also revised in this month's report to show bigger declines in January and February. At month's end, the total balance of revolving credit was just $790 billion -- the lowest level seen since August 2004. That brings revolving credit down 18.9% since it peaked in August 2008. That's pretty incredible: Americans have paid down their credit cards by nearly 20% in less than three years.
Unfortunately, they have more than made up for those revolving debt declines with additional nonrevolving debt over the past several months. Loans for things like autos and education rose at an annualized rate of 5.2% in April. To be sure, the federal government has ensured that those student loan dollars keep flowing: over the past two years its credit holdings have increased by 185% to $359 billion.